Recently, several laws were established in the United Kingdom that regulate the use of cryptocurrencies and the price that must be paid for mining, trading and other crypto transactions.
However, it has been decided to make some changes around the rules that were in the tax policy documents that relate to the tax.
The UK document is updated
The HMRC tax institution has taken the initiative to publish new changes and / or update the document indicating why taxes must be paid to the HMRC for cryptocurrencies.
Now, the HMRC has taken into account that cryptocurrencies are considered an asset almost everywhere in the world. Therefore, being an asset, a part of its value must be paid to the tax authority. This was clarified in the following comment:
Digital currencies are not a currency, they are an asset, therefore, the correct term is "cryptoactive" and not cryptocurrency.
That is why it is thought that a tax must be paid to Her Majesty’s Revenue and Custonms. However, the update of this document will apply mostly to companies. Although, a tax will also be charged to individuals who handle cryptocurrencies.
Taxes will be paid for using cryptocurrencies; explanation of the new fiscal document
The focus of the new fiscal document is aimed primarily at companies that work with cryptocurrencies. However, as mentioned above, it will also apply to people; although not in all cases.
This document will apply on the following occasions for natural persons:
- Taxes will be paid when a service payment is made.
- When cryptocurrencies are exchanged or sold for fiat money.
- When doing business with other cryptocurrencies.
- When gifts are made with digital currencies.
- Among others.
The aspects mentioned above are the main ones for which people must pay taxes to use digital currencies. However, for companies these rules will change a bit.
However, this change is due to the possibility that companies handle a greater amount of cryptocurrencies. Therefore, the policies and norms on the fiscal tax cannot be the same as those applied in private persons.
On the other hand, the HMRC maintains its thinking that cryptocurrencies should enter in terms of business activity. Since, a person who operates with cryptocurrencies usually has the same capacity of an active organization. To clarify this, the tax entity mentioned:
HMRC expects individuals to buy and sell crypto assets with such frequency, level of organization and sophistication that the activity amounts to a financial trade in itself.
Details about the aspects in which you will have to pay for cryptocurrencies
There will be various aspects for which people and / or companies must pay a tax to the HMRC for using digital currencies.
In the fiscal document it is mentioned that mining must be paid. Since, it is an activity that can be classified as a commercial or business activity. That is why, individuals who mine must pay income taxes just like a corporation.
This occurs, since it is also classified as commercial or business activity. On the other hand, taxes will also be paid when digital currencies are sold or exchanged and profits are obtained.
Companies that make token payments within the United Kingdom must pay tax taxes. As well as they will have to pay a tax tax in case of paying services with these currencies.
It should also be mentioned that corporations or companies that pay salaries with tokens will be forced to pay taxes and other compensation to the HMRC.
On the other hand, the HMRC tax document indicates that a special rule or law will be applied in case individuals want to use cryptocurrency volatility to avoid taxes. This rule is known as the special grouping rule.
Which indicates that the amount of taxes payable will be calculated taking into account the gain and loss after having made a sale or exchange, without 30 days having elapsed after acquiring tokens from a cryptocurrency.
Therefore, if a person uses such a strategy to evade taxes, it is possible that he may be forced to pay a higher amount of taxes, due to the special grouping rule. Applying this special rule, the HMRC ensures that people pay the corresponding amount of taxes, without the possibility of evading them.
Is it possible to continue adding rules and / or restrictions on cryptocurrencies and the Blockchain network?
Possibly the year 2019 is the year in which more rules have been created to control the use of cryptocurrencies, mining activity, the Blockchain network and other related aspects.
However, it is possible to continue adding rules and laws to regulate their activity. Although, there are already several tax documents in which, it is indicated that an amount of money must be paid for operating with cryptos.
Therefore, it is considered that the year 2020 will be a year with greater relevance in this aspect. Since, the probability of implementing more laws on cryptocurrencies is quite high.
Therefore, the possibility that there will be an extremely high increase in income tax returns is considered for companies that work with tokens and make payments with cryptos. As well as for individuals who perform mining, trading and other operations with virtual currencies.
I am an 18-year-old young man from Venezuela, a lover of technology, innovation and economic events that govern the world. One of my passions are cryptocurrencies.